Russia-Ukraine War Threatens Import-Depending African Economies

Feb 28, 2022

Last week, the Renaissance Capital Investment Bank Economist Director Charlie Robertson warned that the Ukraine-Russian war will severely impact African countries that depend on food imports from Europe.

“Africa keeps centuries-old ties with Western countries,” Robertson said, stressing that this continent imported US$6.9 billion in agricultural products from Russia and Ukraine in 2020.

He considered that the greatest danger facing Africa is the likely rise in bread prices since Russia and Ukraine currently supply about 30 percent of the world’s wheat. “Egypt, Tunisia, Morocco, Libya, and Algeria —which heavily consume wheat— could be most affected by tight supply and rising prices,” Robertson stated.

Supply chain disruptions contribute to high inflation that will also impact energy prices. “The budgets of oil-producing countries like Nigeria and Angola could benefit from this situation, but the cost of transport is likely to increase for all Africans,” Robertson noted.

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Kenyan authorities are concerned about the impact that the war and the financial sanctions imposed by the U.S., the European Union (EU), and the U.K. against Russia will have on their country’s tea industry, which helps Kenya earn foreign currency.

“Tea and other beverages are classified as food and should not normally be affected by trade sanctions,” East Africa Tea Traders Association (EATTA) Director Edward Mudibo, recalling that Russia is among the top five consumers of Kenyan tea.

Despite this, he considered the market is likely to destabilize given that some traders do not want to take the risk of negotiating with a country excluded from international payment systems.